A storm of outrage is brewing in Ghana as mobile money (MoMo) loans, once hailed as a lifeline for small businesses, spiral into a debt trap for borrowers.
With interest rates soaring as high as 8.9% per month—equivalent to 106.8% annually—micro enterprises are buckling under the weight of repayments, sparking urgent calls for regulatory intervention.
The crisis deepens as borrowers report receiving less cash than advertised due to hidden processing fees, even as they remain liable to repay the full loan amount plus crippling interest. Small business owners, often relying on these loans for urgent working capital, describe the situation as “financial quicksand.” A tomato trader in Accra, who requested anonymity, lamented, “I borrowed GH¢1,000 but walked away with GH¢850. Now I owe GH¢1,000 plus interest. How do I survive this?”
Lenders justify the steep rates by pointing to high default risks, claiming borrowers frequently miss payments. Critics, however, argue the logic is circular: exorbitant interest itself triggers defaults. “When you’re charging someone 100% a year, you’re not giving them a chance to succeed. You’re setting them up to fail,” said financial analyst Kwame Asare.
The Bank of Ghana faces mounting scrutiny for its uneven oversight. While traditional banks adhere to moderated rates under the Ghana Reference Rate (GRR), the micro-lending sector operates in a regulatory vacuum. This gap leaves vulnerable borrowers—market traders, artisans, and street vendors—exposed to predatory practices. Observers question why protections haven’t been extended to a sector serving those least equipped to absorb financial shocks.
Market advocates are demanding immediate reforms. “Introducing credit scoring could reward reliable borrowers with lower rates,” argued Ama Serwah, a microfinance researcher. “Instead, lenders apply a blanket approach, punishing everyone for the risks of a few.”
The stakes extend beyond individual borrowers. Ghana’s push toward digital finance has seen mobile money transactions balloon, yet affordable credit remains elusive. Economists warn that without accessible loans, small businesses—the backbone of local economies—cannot expand. This stagnation risks tilting the economy toward consumption-driven growth, fueling inflation and hindering long-term productivity.
As defaults rise and businesses shutter, the silence from regulators grows louder. The Central Bank has yet to signal whether it will rein in the sector, leaving borrowers in limbo. For now, the promise of mobile loans as a tool for prosperity remains unfulfilled—a stark reminder that innovation without oversight often breeds exploitation.
The question now isn’t just about interest rates, but priorities: Will Ghana protect its entrepreneurs, or let a broken system undermine its economic future?
